New incentive to fix! ING Direct introduces 3.98% three-year fixed home loan rate

Challenger bank ING Direct, winner of a coveted Mozo Experts Choice Award in the best value fixed rate home loan category in 2015, has announced that its three-year fixed interest rate for owner occupier Orange Advantage customers has dropped to 3.98% p.a. (comparison rate 4.66%).

Your Investment Property Mag reported that just 29% of ING Direct home loan customers have a fixed or partially fixed rate mortgage.

John Arnott, ING executive director told the magazine that, “the interest rate cycle is at a relatively low point, making it a good time for home buyers to fix or partially fix their mortgages."

“We are not expecting the RBA to move the cash rate anytime soon but a partially fixed and variable home loan can deliver both peace of mind and flexibility with repayments,” he added.

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The rate reduction is a 0.10% p.a. discount, which is available to new ING Direct customers, as well as customers with existing owner-occupier Orange Advantage home loans, who would like to split, switch to or increase the portion of their loan on a fixed rate.

On a loan of $400,000 over a term of 25 years, switching 40% of the loan, or $160,000 to this low rate could save a borrower around $160 each year, as opposed to the higher variable rate of 4.13%.

The value of a partially fixed loan is that repayments would remain the same on that portion of a customer's mortgage, should market rates rise in the future. If variable rates were to rise by just 0.15% to 4.28%, having that $160,000 locked in at a low fixed rate of 3.98% means that customers could double their savings, to around $320 each year.

ING Direct isn’t the only bank that has recently made cuts to its fixed rates for owner-occupier home loans. Other recent reductions in mortgage rates across the market include:

  • BankVic 2 year fixed rate home loan dropped by 0.42% to 3.87% (comparison rate 4.83%).
  • Heritage Bank 2 year fixed rate cut by 0.14% to 3.99% (comparison rate 5.15%).
  • Hume Bank 2 year fixed rate dropped by 0.15% to 4.15% (comparison rate 5.20%), 3 year fixed rates by 0.05% to 4.25% (comparison rate 5.13%) and 4 and 5 year fixed rates by 0.05% to 4.55% (comparison rate 5.16% and 5.11% respectively).
  • Newcastle Permanent 1 year fixed rate cut by 0.10% to 3.89% (comparison rate 5.21%), 2 year fixed rate dropped by 0.20% to 3.99% (comparison rate 5.13%) and 3 year fixed rate by 0.10% to 4.19% (comparison rate 5.06%).
  • Update: Bank of Sydney has also reduced its three-year fixed rates to 3.98% (comparison rate 4.50%).

Visit our home loan comparison calculator to find out how much these cut rates could save on your home loan. You can also compare the entire home loan market at our home loans hub.